natural advantages, or those legitimate rewards which flow from large investments, business industries, and competing systems of transportation to facilitate and increase commerce."

This view has constantly been held and enforced by the Interstate Commerce Commission, as well as by the courts. "It is not the duty of carriers, nor is it proper, that they undertake by adjustment of rates or otherwise to impair or neutralize the natural commercial advantages resulting from location or other favorable condition of one territory in order to put another territory on an equal footing with it in a common market. Each locality competing with others in a common market is entitled to reasonable and just rates at the hands of the carriers serving it and to the benefit of all its natural advantages. If this result in prejudice to one and advantage to another, it is not the undue prejudice or advantage forbidden by the statute, but flows naturally from conditions beyond the legitimate sphere of legal or other regulation." 11

8844. Equalizing rates sometimes may be established.

The comparison of the rate alleged to be illegal must be made with the rates from neighboring towns, similar in size, situation and volume of competing traffic, and at approximately the same distance from common markets. 12

It is entirely legitimate for a carrier to make a difference

11 Quoted from Freight Bureau of the Cincinnati Chamber of Commerce v. Cincinnati, N. O. & T. P. R. Co., 6 I. C. C. Rep. 195, 4 Int. Com. Rep. 592 (1893). See to the same effect, James & M. Buggy Co. v. Cincinnati, N. O. & T. P. R. Co., 3 Int. Com. Rep. 682, 4 I. C. C. Rep. 744 (1893); Raworth v. Northern Pac. R. Co., 3 Int. Com. Rep. 857, 5 I. C. C. Rep. 234 (1893); Eau Claire Board of Trade v. Chicago, M. & St. P. R. Co., 4 Int. Com. Rep. 65, 5 I. C. C. Rep. 264 (1892); Chamber of Commerce of Minneapolis v. Great Northern R. Co., 4 Int. Com. Rep. 230, 5 I. C. C. Rep. 571 (1894); Commercial Club of Omaha v. Chicago, R. I. & P. Ry., 6 I. C. C. Rep. 675 (1896).

12 Knapp, Com. in Eau Claire Board of Trade v. Chicago, M. & S. L. Ry., 4 Int. Com. Rep. 65, 5 I. C. C. Rep. 264 (1892).

in rates based on a difference in natural advantages, 13 but even the most enthusiastic economists would hardly go so far as to argue that the railroads must make it their policy to equalize natural advantages, to the end that all regions of production shall have equal access to central markets. And surely no ratemaking body would compel the establishing of preferential rates.

§ 845. Public policy for equalization.

That there is a certain public policy in permitting equalization, subject to strict limitations, may be admitted: "It is not the duty of carriers to disregard distance or natural disadvantages of location, and equalize access to markets for all engaged in a common business though differently situated. It may, however, be lawful and be supported by just public considerations, for carriers to give equal access to markets to localities of dissimilar distances; and it may involve no material difference in expense to the carrier. No producer or shipper has an exclusive right to supply a market, and the interests of consumers and of the general public may justify carriers in enlarging the field from which the demand for a commodity inay be supplied on terms of equality for transportation. That is only a recognition of the principle that the general interests are paramount to individual or local interests. In other cases it may be unreasonable, and therefore unlawful, to give equal rates to diversely situated localities where a demand does not exist for a larger supply, and where conditions intervene that give an undue preference or advantage to the less favorably situated localities."

99 14

13 Commercial Club of Omaha v. Chicago & N. R. R., 7 I. C. C. Rep. 386 (1897).

14 Quoted from Schoonmaker, Com. in Imperial Coal Co. v. Pittsburgh & L. E. R. R., 2 Int. Com. Rep. 436, 2 I. C. C. Rep. 618 (1889).

8846. Grouping by reason of competition in the articles transported.

Grouping is often resorted to in order to preserve competition in commodities carried, where a strict mileage rate would give too great an advantage to the commodities produced at the nearest point to the market. On this ground the railroads entering New York were allowed to group stations which supplied the city with milk, and to charge a uniform rate for milk carried from all stations in the group. 15 But the limitations upon this sort of thing were set forth in a later opinion 16 by the Commission, in which the problem was elaborately discussed and it was held that to be just in such cases reasonable zones ought to be established with a uniform rate within each zone.

§ 847. Burden upon the railroad to defend discriminatory

rates.

The question was considered by the Interstate Commerce Commission in connection with rates for the carriage of shingles from Fredericton and Fort Fairfield, respectively, to Boston. The two places in question were situated on different branches of the same railroad. Mr. Commissioner Veazey17 said: "A departure from equal mileage rates on different branches or divisions of a road is not conclusive that such rates are unlawful, but the burden is on the company making such departure to show its rates to be reasonable when disputed.

"The essential question here is one of relatively reasonable rates; not whether either rate is reasonable in itself. It is the effect of the carriers' action at one point upon the legitimate business prosperity of another point, which is the vital point in

15 Howell v. New York, L. E. & W. R. R., 2 Int. Com. Rep. 162,.2 I. C. C. Rep. 272 (1888).

16 Milk Dealers' Assn. v. Delaware, L. & W. Ry., 7 I. C. C. Rep. 92 (1897).

17 Logan v. Chicago & N. W. R. Co., 2 Int. Com. Rep. 431, 2 I. C. C. Rep. 604 (1889).

this controversy. If the present Fredericton rate does not actually result in profit, the carriers should not seek to control or stimulate traffic from that point by making the rate so low; and if they carry for unusually small compensation from that place they do so under the plain injunction of the law that their action must not inflict undue prejudice or disadvantage upon other communities or persons. When a carrier engages in transportation for which, by reason of competitive conditions or for purposes of its own, it receives less rates from some patrons and at some localities, it accepts the legal obligation to give impartial service to other patrons and at other localities that sustain similar relations to the traffic." 18

§ 848. Question of dissimilarity of condition one of fact.

The question as to what in any particular case justifies a difference of rate is one of fact. 19 "As the third section of the act, which forbids the making or giving any undue or unreasonable preference or advantage to any particular person or locality, does not define what, under that section, shall constitute a preference or advantage to be undue or unreasonable, and as the fourth section, which forbids the charging or receiving greater compensation in the aggregate for the transportation of like kinds of property for a shorter than for a longer haul over the same. line, under substantially similar circumstances and conditions, does not define or describe in what the similarity or dissimilarity of circumstances and conditions shall consist, it cannot be doubted that whether, in particular instances, there has been an undue or unreasonable prejudice or preference, or whether the circumstances and conditions of the carriage have been substan

18 Manufacturers & Jobbers Union v. Minneapolis & St. L. R. Co., 3 Int. Com. Rep. 115, 4 I. C. C. Rep. 79 (1891).

19 Shiras, J., in Interstate Commerce Com. v. Alabama Midland Ry., 168 U. S. 144, 42 L. Ed. 414, 18 Sup. Ct. 45, B. & W. 433 (1897).

tially similar or otherwise, are questions of fact, depending on the matters proved in each case." 20

TOPIC D-LONG AND SHORT HAUL.

§ 849. Statutes regulating rates for long and short haul. The seeming unfairness of a higher rate for the intermediate short than for the longer haul has led to the passing of statutes in many jurisdictions, forbidding charging less for a long haul than for a short haul embraced in it; the chief of which is the Interstate Commerce Act. In that act the provision is subject to the condition that the hauls should be under substantially similar conditions. There is already a considerable body of judicial interpretation of this prohibition of charging more for short than for long haul, and more especially of the extent to which the modifying clauses affect this prohibition. These cases are considered with some detail in this chapter.

850. Various systems of making distance rates.

These statutory provisions affect rate-making only to a certain extent. "There are four principal methods of making rates to localities: that prevailing in the Trunk Line Territory, in practical compliance with the fourth section; that in the Southeastern Territory, where basing points or trade centers are recog nized to which through rates are made and the local rates are added for rates to tributary territory. To the Pacific coast, water competition has brought about low rates, and a combination of these with the local rate back fixes the rates for the interior mountain territory points. In the case under considera

20 Citing Denaby Main Colliery Co. v. Manchester, &c., Ry. Co., 3 Ry. & Can. Cas. 426 (1876); Phipps v. London & Northwestern Railway [1892], 2 Q. B. 229; Cincinnati, N. O. & Tex. Pac. Ry. v. Interstate Commerce Commission, 162 U. S. 184, 40 L. Ed. 935, 16 Sup. Ct. 700 (1896); Texas & Pacific Railway v. Interstate Commerce Commission, 162 U. S. 197, 40 L. Ed. 940, 16 Sup. Ct. 666 (1896).